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You just won a huge lottery jackpot! Now what?

Oct 22, 2018, 8:43 pm

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Mega Millions / PowerballMega Millions / Powerball: You just won a huge lottery jackpot! Now what?Rating:

By Todd Northrop

This week we are seeing the largest lottery jackpots in history up for grabs to anyone spending as little as $2 for a ticket.

The $1.6 billion Mega Millions jackpot is certainly getting most of the attention, but the $620 million Powerball jackpot would be just as life-changing to the winner.

That's a total of more than $2.2 billion between the two games.  It's not just life-changing money, it's multi-generational wealth.

When one or more tickets eventually hit all six numbers, that kind of money would make anyone temporarily lose their mind.  Can you imagine?

If you happen to be that lucky winner holding the prized lottery ticket, here are answers to some of your first questions.

I've won. Now what?

Lottery officials recommend winners take a deep breath, put their winning ticket in a safe spot and consult with a reputable financial planner before visiting lottery headquarters to claim the prize. (Your winning ticket must always be claimed in the state in which you purchased the ticket.)

The first decision you hear people talking about is whether to take the cash option, which is currently $904.9 million for Mega Millions and $354.3 million for Powerball, or an annuity, with one initial payment and annual installments over 29 years. Nearly all winners opt for cash, but the annuity has advantages, as it reduces the tax bill a little and offers a stable flow of income that climbs by 5% annually.

But just because people talk about that being your first decision, it should not be. Your first decision should be who is on your financial team.

You will need a good lawyer, a financial planner, and an accountant.  You will certainly want to add other team members down the road, such as a charitable portfolio manager, but don't feel you need to get them on board immediately.

Your team can help counsel you on which payout option is best for your situation, when and how to claim your jackpot, where to put all that money, how to manage publicity, and a thousand other questions you'll have. Your trusted team can keep you calm and knowledgeable as you navigate the new uncharted waters of your new wealth without making a wreck of things.

How long do I have to claim the jackpot?

States have different rules, so depending on where you purchased the ticket, you typically have either 180 days or a year to claim the jackpot. The one exception is New Mexico, which only provides 90 days to make the claim.

A complete list of claim periods by state can be found at USA Mega's Ways to Win Mega Millions page.

Do I get my money instantly?

No, you can't just cash one of those oversized checks shown in all the winner photos. Payment speed also varies by state, but a week or two is common. Carole Gentry, a spokeswoman for the Maryland lottery, said the requirement is seven to 10 days in that state.

Can I keep my name secret?

Lottery jackpot winners can remain anonymous in seven states: Delaware, Kansas, Maryland, North Dakota, Ohio, South Carolina, and Texas. In Arizona, people who win more than $600 can keep their name secret for 90 days after claiming prizes, but after that names are public record. In Michigan, winners can remain anonymous unless they win Mega Millions or Powerball prizes.

There are also legal structures that can be created under which to claim the jackpot, which might provide a degree of anonymity. (That's why you have a good lawyer on the team.)

Some states have press conference requirements too, so you may have to be public about your claim, depending on the policies of the state you bought the ticket in. Again, your team can help you navigate these requirements to your best possible advantage.

Most people would be nervous at the thought of being front-and-center in a press conference, but keep in mind that some lottery officials say it's actually better to do a brief press conference than not.

The reason? Because even in states that allow for anonymity (or near anonymity through a trust), open records laws in the state might allow persistent reporters to pierce your veil of privacy and gain access to public records that contain your name. And such open records access might just surface something else about you that you would rather keep quiet.

By participating in a press conference, you essentially give the press the attention they want, and they won't be as hungry to dig through records looking for information about a "mystery winner".

What about taxes?

For winners of $5,000 or more, all states automatically withhold 24% in federal taxes before you get a dime. (For non-US citizens, that number is 30%.) But state taxes vary widely.

Some big states, including California, don't withhold taxes from lottery winnings, and some like Texas don't have individual income taxes at all. For others, the state takes a bite, especially in New York, where a winner would need to pay a state tax of 8.8%. Residents of New York City would pay an additional tax of 3.9%.

To see what the federal and state tax withholdings are initially made in your state, USA Mega has a Mega Millions Jackpot Analysis that even includes a year-by-year analysis of the annuity payouts. A Powerball Jackpot Analysis is also available.

Keep in mind, all we have discussed so far is the amount of taxes initially withheld before you get your money. There's more.

Melissa Labant, a tax policy expert at the American Institute of Certified Public Accountants, said winners should realize that while taxes are initially withheld when prizes are awarded, more money will likely be due at tax time as people suddenly are in up to a 37% tax bracket.

"That catches people off guard," she said. "You have to be prepared to write another check to the IRS in April."

This can also happen on the state level.  For example, even though Delaware does not initially withhold any state taxes, you will need to pay a 6.6% state tax in April, plus if you live in Wilmington you'll add another 1.25%.

What are my taxes if I don't live in the state where I bought the ticket?

This can get complicated, but here's the rule of thumb: You will generally pay a net amount of the higher tax rate between the state you live in and the state where you bought the ticket.

For the most part winners pay taxes where they bought the ticket and then can get a credit on their taxes in their home state. The final tax bill can depend on if the state where you live taxes at a higher or lower rate than where you purchased the ticket. Rules vary by state, so this is a good topic for that financial planner. (It always comes back to the team.)

What are my next steps?

After you finish hiring your team, you have claimed your jackpot, and done whatever minimal amount of publicity that is necessary, that's a good time to take a nice long vacation. Get far away to someplace where you can unwind and nobody knows you.

We all see how fast the news cycles go these days.  After a few weeks the media no longer will be talking about that billion-dollar jackpot and reporters will not be interested in camping out at your home.

That's not to say that you won't have friends, neighbors, and relatives — as well as complete strangers — hounding you for money and donations, but a large chunk of the attention will be diminished while you're relaxing on the beach.

What do I do when everyone asks for money?

Remember that team you hired? Because you should — you are paying them to help.

You will get hundreds or thousands of requests for money and you will hear every sob story in the book. Some of them might be real, but most are probably the result of good acting lessons.

By filtering every request for money through your team, you can deal with all those requests without feeling that truly good causes are being missed. (That might be a good time to add a charitable portfolio manager to the team.)

So when someone asks for money, no matter how pitiful the story sounds, always give it to your team to evaluate. Don't make split-second decisions on handing out money.

Unfortunately family may be the most difficult to deal with, and that's something you might want to think about how you want to handle while you're relaxing on the beach. Just do your best to avoid adding unnecessary drama to your life.

Most importantly, just smile and remember how lucky you are to be the winner of so much wealth that it can improve the lives of your family for generations to come.

Lottery Post Staff

We'd love to see your comments here!  Register for a FREE membership — it takes just a few moments — and you'll be able to post comments here and on any of our forums. If you're already a member, you can Log In to post a comment.

137 comments. Last comment 2 years ago by MsBee18.
Page 1 of 10
Original Bey's avatar - Lottery-022.jpg

Bahamas
Member #133458
September 30, 2012
6792 Posts
Offline
Posted: October 22, 2018, 8:46 pm - IP Logged

Apply to LP for Elite status on the grounds of extraordinary achievement.

"Do everything you can. Then, leave the rest to luck."

    Avatar
    Portland, OR
    United States
    Member #145969
    August 20, 2013
    262 Posts
    Offline
    Posted: October 22, 2018, 8:57 pm - IP Logged

    "For winners of $5,000 or more, all states automatically withhold 24 percent in federal taxes before you get a dime. (For non-US citizens, that number is 30%.) But state taxes vary widely."

    Is the bold statement accurate or complete, Todd?  So US residents are charged 30% or by non-US citizens you mean non-citizens who live out of the country?

    People are more complicated than the masks they wear in society...

      LottoLucy's avatar - hereslucy header.jpg

      United States
      Member #131590
      August 14, 2012
      317 Posts
      Offline
      Posted: October 22, 2018, 9:05 pm - IP Logged

      By Todd Northrop

      This week we are seeing the largest lottery jackpots in history up for grabs to anyone spending as little as $2 for a ticket.

      The $1.6 billion Mega Millions jackpot is certainly getting most of the attention, but the $620 million Powerball jackpot would be just as life-changing to the winner.

      That's a total of more than $2.2 billion between the two games.  It's not just life-changing money, it's multi-generational wealth.

      When one or more tickets eventually hit all six numbers, that kind of money would make anyone temporarily lose their mind.  Can you imagine?

      If you happen to be that lucky winner holding the prized lottery ticket, here are answers to some of your first questions.

      I've won. Now what?

      Lottery officials recommend winners take a deep breath, put their winning ticket in a safe spot and consult with a reputable financial planner before visiting lottery headquarters to claim the prize. (Your winning ticket must always be claimed in the state in which you purchased the ticket.)

      The first decision you hear people talking about is whether to take the cash option, which is currently $904.9 million for Mega Millions and $354.3 million for Powerball, or an annuity, with one initial payment and annual installments over 29 years. Nearly all winners opt for cash, but the annuity has advantages, as it reduces the tax bill a little and offers a stable flow of income that climbs by 5% annually.

      But just because people talk about that being your first decision, it should not be. Your first decision should be who is on your financial team.

      You will need a good lawyer, a financial planner, and an accountant.  You will certainly want to add other team members down the road, such as a charitable portfolio manager, but don't feel you need to get them on board immediately.

      Your team can help counsel you on which payout option is best for your situation, when and how to claim your jackpot, where to put all that money, how to manage publicity, and a thousand other questions you'll have. Your trusted team can keep you calm and knowledgeable as you navigate the new uncharted waters of your new wealth without making a wreck of things.

      How long do I have to claim the jackpot?

      States have different rules, so depending on where you purchased the ticket, you typically have either 180 days or a year to claim the jackpot. The one exception is New Mexico, which only provides 90 days to make the claim.

      A complete list of claim periods by state can be found at USA Mega's Ways to Win Mega Millions page.

      Do I get my money instantly?

      No, you can't just cash one of those oversized checks shown in all the winner photos. Payment speed also varies by state, but a week or two is common. Carole Gentry, a spokeswoman for the Maryland lottery, said the requirement is seven to 10 days in that state.

      Can I keep my name secret?

      Lottery jackpot winners can remain anonymous in seven states: Delaware, Kansas, Maryland, North Dakota, Ohio, South Carolina, and Texas. In Arizona, people who win more than $600 can keep their name secret for 90 days after claiming prizes, but after that names are public record. In Michigan, winners can remain anonymous unless they win Mega Millions or Powerball prizes.

      There are also legal structures that can be created under which to claim the jackpot, which might provide a degree of anonymity. (That's why you have a good lawyer on the team.)

      Some states have press conference requirements too, so you may have to be public about your claim, depending on the policies of the state you bought the ticket in. Again, your team can help you navigate these requirements to your best possible advantage.

      Most people would be nervous at the thought of being front-and-center in a press conference, but keep in mind that some lottery officials say it's actually better to do a brief press conference than not.

      The reason? Because even in states that allow for anonymity (or near anonymity through a trust), open records laws in the state might allow persistent reporters to pierce your veil of privacy and gain access to public records that contain your name. And such open records access might just surface something else about you that you would rather keep quiet.

      By participating in a press conference, you essentially give the press the attention they want, and they won't be as hungry to dig through records looking for information about a "mystery winner".

      What about taxes?

      For winners of $5,000 or more, all states automatically withhold 24% in federal taxes before you get a dime. (For non-US citizens, that number is 30%.) But state taxes vary widely.

      Some big states, including California, don't withhold taxes from lottery winnings, and some like Texas don't have individual income taxes at all. For others, the state takes a bite, especially in New York, where a winner would need to pay a state tax of 8.8%. Residents of New York City would pay an additional tax of 3.9%.

      To see what the federal and state tax withholdings are initially made in your state, USA Mega has a Mega Millions Jackpot Analysis that even includes a year-by-year analysis of the annuity payouts. A Powerball Jackpot Analysis is also available.

      Keep in mind, all we have discussed so far is the amount of taxes initially withheld before you get your money. There's more.

      Melissa Labant, a tax policy expert at the American Institute of Certified Public Accountants, said winners should realize that while taxes are initially withheld when prizes are awarded, more money will likely be due at tax time as people suddenly are in up to a 37% tax bracket.

      "That catches people off guard," she said. "You have to be prepared to write another check to the IRS in April."

      This can also happen on the state level.  For example, even though Delaware does not initially withhold any state taxes, you will need to pay a 6.6% state tax in April, plus if you live in Wilmington you'll add another 1.25%.

      What are my taxes if I don't live in the state where I bought the ticket?

      This can get complicated, but here's the rule of thumb: You will generally pay a net amount of the higher tax rate between the state you live in and the state where you bought the ticket.

      For the most part winners pay taxes where they bought the ticket and then can get a credit on their taxes in their home state. The final tax bill can depend on if the state where you live taxes at a higher or lower rate than where you purchased the ticket. Rules vary by state, so this is a good topic for that financial planner. (It always comes back to the team.)

      What are my next steps?

      After you finish hiring your team, you have claimed your jackpot, and done whatever minimal amount of publicity that is necessary, that's a good time to take a nice long vacation. Get far away to someplace where you can unwind and nobody knows you.

      We all see how fast the news cycles go these days.  After a few weeks the media no longer will be talking about that billion-dollar jackpot and reporters will not be interested in camping out at your home.

      That's not to say that you won't have friends, neighbors, and relatives — as well as complete strangers — hounding you for money and donations, but a large chunk of the attention will be diminished while you're relaxing on the beach.

      What do I do when everyone asks for money?

      Remember that team you hired? Because you should — you are paying them to help.

      You will get hundreds or thousands of requests for money and you will hear every sob story in the book. Some of them might be real, but most are probably the result of good acting lessons.

      By filtering every request for money through your team, you can deal with all those requests without feeling that truly good causes are being missed. (That might be a good time to add a charitable portfolio manager to the team.)

      So when someone asks for money, no matter how pitiful the story sounds, always give it to your team to evaluate. Don't make split-second decisions on handing out money.

      Unfortunately family may be the most difficult to deal with, and that's something you might want to think about how you want to handle while you're relaxing on the beach. Just do your best to avoid adding unnecessary drama to your life.

      Most importantly, just smile and remember how lucky you are to be the winner of so much wealth that it can improve the lives of your family for generations to come.

      Can’t you can be anonymous in Texas if you win more than $1 million?

      Lotto Lucy

        music*'s avatar - DiscoBallGlowing
        Fresno, California
        United States
        Member #157851
        August 2, 2014
        3919 Posts
        Online
        Posted: October 22, 2018, 9:28 pm - IP Logged

        Here in California, we will wait six to eight weeks to get the check. A good time for a vacation. I am sure that a bank or credit union will loan you enough to get you through your time on vacation. Problems? Refer them to your team. 

         Need Security? Bodyguards? Ask your team for help. 

         US Flag

         "We are all in this together!" 

          TheMeatman2005's avatar - lightening
          Brooklyn, NY
          United States
          Member #169719
          October 29, 2015
          1482 Posts
          Offline
          Posted: October 22, 2018, 9:29 pm - IP Logged

          "For winners of $5,000 or more, all states automatically withhold 24 percent in federal taxes before you get a dime. (For non-US citizens, that number is 30%.) But state taxes vary widely."

          Is the bold statement accurate or complete, Todd?  So US residents are charged 30% or by non-US citizens you mean non-citizens who live out of the country?

          U.S. citizens who provide a social security number will have 24% of a prize over $5,000 withheld before receiving the prize.

          If you are not a U.S. citizen or do not provide a social security number when you claim, then they withhold 30% before receiving the prize.

          Also, your state (and local taxes, if any, will be withheld too) before you get any money.

          Plus, as the article states,

          Melissa Labant, a tax policy expert at the American Institute of Certified Public Accountants, said winners should realize that while taxes are initially withheld when prizes are awarded, more money will likely be due at tax time as people suddenly are in up to a 37% tax bracket.

          "That catches people off guard," she said. "You have to be prepared to write another check to the IRS in April."

          I hope this clears up your confusion.

          The Meatman 🥩🍗🍔🍖🍤🌭

          “The quickest way to double your money is to fold it in half and put it in your back pocket.” Will Rogers

          Winning happens in a flash, Like A Bolt Of Lightning!  Patriot

            Avatar
            New Member
            Eugene, OR
            United States
            Member #186914
            January 5, 2018
            5 Posts
            Offline
            Posted: October 22, 2018, 9:33 pm - IP Logged

            I like that California has a "lottery winners handbook" download-able from their website.  Good info no matter what state you live in. 

            I've also always said the lottery needs to compile a book on all the lottery winners who did everything wrong and lost it all; A "here's what NOT to do" book.

            Good Luck to Everyone!

              Groppo's avatar - cat anm.gif

              United States
              Member #162626
              January 7, 2015
              778 Posts
              Offline
              Posted: October 22, 2018, 9:40 pm - IP Logged

              .

              I wonder if things like Optima Tax Relief would apply in these cases,
              or is it just for people who owe the IRS a bunch of back taxes?

              • Don't chase the numbers you play.
              • Play only numbers you've already played, plus however many random picks.
              • But, ALWAYS the regular numbers you play.  This will make you a winner, not a chaser.
                         (so far, though, I've yet to win any significant lotto prize)
              • Oh, but always know where your tickets are, as well as your ticket's deadline.
                Avatar
                Chasing $ Millions.
                White Shores- California
                United States
                Member #136473
                December 12, 2012
                6265 Posts
                Offline
                Posted: October 22, 2018, 9:46 pm - IP Logged

                White Shores, aka Seychelles Baby!

                 * Voice of Reason *   

                 

                People who say it cannot be done should not interrupt those who are doing it- George Bernard Shaw.

                  Avatar
                  Jacksonville
                  United States
                  Member #153801
                  March 26, 2014
                  770 Posts
                  Offline
                  Posted: October 22, 2018, 9:57 pm - IP Logged

                  The Federal tax rates in the future are unknown.  They could easily exceed 37%.  A lump sum is likely the better option because you can reinvest the after-tax dollars.

                    music*'s avatar - DiscoBallGlowing
                    Fresno, California
                    United States
                    Member #157851
                    August 2, 2014
                    3919 Posts
                    Online
                    Posted: October 22, 2018, 9:57 pm - IP Logged

                    $2.2 Billion American dollars will revolutionize my life. I think that I will hire a CFP Certified Financial Planner first. He or She can then help me with hiring the rest of my team. 

                     There are certain questions I have for the CFP.  How are you paid? What will I get for my money?

                     Will you assist me in finding the other members of my team?

                     Can you keep secrets? 

                     "We are all in this together!" 

                      s5thomps's avatar - Lottery-033.jpg
                      Hard Luck, Ak
                      United States
                      Member #23471
                      October 13, 2005
                      350 Posts
                      Offline
                      Posted: October 22, 2018, 10:05 pm - IP Logged

                      3 words....PAIN FREE RETIREMENT! Good Luck everyone!

                      "We make a living by what you get, You make a LIFE by what you give!"

                                                                                     Sir Winston ChurchillSun Smiley

                        Avatar
                        New Member
                        North Fork
                        United States
                        Member #192936
                        October 17, 2018
                        14 Posts
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                        Posted: October 22, 2018, 10:14 pm - IP Logged

                        I think it would be wise to plan a few other aspects as well. Plan ahead what you would do if you won, before you win.

                        Look up the people you would potentially hire. Write their contact numbers down. Chose how you will spend your money, while you are actually waiting for it to go through security, before it hits your bank account.

                        Will you stay in the United states in an Air-BNB far far away, with your relatives in a different location, or perhaps stay where you live and flaunt your new winnings around so all will know? (I wouldn't advise that)  Decide now who you will share the wealth with. I would find a competent adviser that could help me process the windfall. People actually get paid to guide you through a situation like that. If you haven't dealt with lots of money before it would be a wise step to have people around you who could help you stay grounded.

                        Write out your publicity speech now or any other speeches you will be making. What will you do if you can't hold back telling someone and it doesn't go as well as you thought. Plan what you will do if you are tempted to let someone know you won before you should. 

                        Oh there is so much that could be done now before the big reveal. Figure out what you would do if you actually won and take as much action as you can today towards it. Even if you don't win, it sure is entertaining to imagine it.

                          dpoly1's avatar - driver
                          PA
                          United States
                          Member #66139
                          October 16, 2008
                          1988 Posts
                          Offline
                          Posted: October 22, 2018, 10:27 pm - IP Logged

                          I already have my plan

                          All I need is the big jackpot

                          Never share anything about your plan!

                          Dance

                          dpoly1 - Playing the lottery to save the jobs of those that build, transport, sell & maintain luxury items! -

                           

                          Eschew Poverty ........... Vote Conservative!

                            ohiopick3's avatar - Lottery-063.jpg
                            Ohio
                            United States
                            Member #3023
                            December 14, 2003
                            4246 Posts
                            Offline
                            Posted: October 22, 2018, 10:29 pm - IP Logged

                            Hit / Win First, Worry about everything else later!